President Obama's deficit reduction plan announced yesterday proposes to save $248 billion from Medicare and $72 billion from Medicaid, and other health programs hinged on legislative action fixing the Sustainable Growth Rate. Healthcare organizations say the proposed savings will be detrimental.
"These proposals are presented in the context of a Medicare baseline that assumes legislative action to permanently prevent current law reductions in Medicare physician payment rates consistent with the Administration's commitment to fix the sustainable growth rate policy in a fiscally responsible way," says the president's plan. "Failing to do so simply masks the worsening long-run deficit."
[See also: 'Antibiotics' needed to cure Sustainable Growth Rate infection.]
The president's Plan for Economic Growth and Deficit Reduction saves more than $3 trillion dollars – in addition to the $1 trillion in cuts already signed into law in the Budget Control Act – over 10 years.
Some of the plan's healthcare savings proposals include:
• reducing Medicare coverage of bad debt payments to 25 percent over three years, beginning in 2013
• ending the add-on payment for hospitals and physicians in low-population states
• reducing payments to critical access hospitals (CAHs) from 101 percent to 100 percent of reasonable costs and eliminating the CAH designation for those that are less than 10 miles from the nearest hospital
• gradually realign payments with costs through adjustments to payment rate updates for post-acute care providers such as skilled nursing facilities, long-term care hospitals and home health
• aligning Medicare drug payment policies with Medicaid policies for low-income beneficiaries
• continuing to cut waste, fraud and abuse in Medicare
• increasing income-related premiums under Medicare Parts B and D
• introducing home health co-payments for new Medicare beneficiaries
• reducing the Medicaid provider tax threshold beginning in 2015
• limiting Medicaid reimbursement of durable equipment based on Medicare rates
• reducing indirect medical education add-on payments by 10 percent
While a statement from the American Medical Association commended Obama for recognizing the importance of fixing the SGR, other healthcare organizations were not enamored with what his plan proposes.
"The long-term cost to the nation's health will far outweigh the near-term savings offered by President Obama's deficit-reduction plan," said Darrell Kirch, MD, president and CEO of the Association of American Medical Colleges in a statement. "By forcing drastic cuts to Medicare and Medicaid, this proposal will hurt beneficiaries, exacerbate the already critical shortage of doctors in this country, and cost tens of thousands of jobs that America can't afford to lose."
"(Obama's) plan to cut Medicare and Medicaid funding would translate into at least 200,000 job losses to hospitals and the businesses they support by 2021. This is the wrong prescription to create a healthier America and sustain job growth in a sector of the economy that is actually adding jobs, " said Rich Umbdenstock, president and CEO of the American Hospital Association in a statement. "Further funding cuts would mean decreased access to care for our nation's seniors and could overload emergency rooms, shut down trauma units and reduce patient access to the latest treatments."
"Hospitals recognize that federal health programs must be modernized to address the needs of a changing America," he added, "but it cannot be done on the backs of providers who care for our nation's most vulnerable – or thwart job creation."
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.